Exploring Dave Ramsey.

Hey all. How’s it going? I’m doing well – I mean, recovering from a pretty deep food coma over Christmas was somewhat challenging, but that’s “all part of it”, as my husband would say.

Long before Christmas came, I began thinking about my New Year’s Resolution. A bit premature, I know, but stay with me here.

I would really, really, really like to eliminate some of my debt in 2013. Total financial freedom is something John and I have been striving for for several years. Aside from our mortgage (which is in both our names, but John pays), I only have two loans right now: My student loan and my car loan. I pay more than the minimum payment each month, but I still have about three years on both notes.

I’ve heard a lot about the Dave Ramsey budgeting plan in the last year or so, and I decided to check out some of his books from the library to see if his plan would lead us in the right direction. Several of my friends and coworkers (and one of my favorite bloggers) have used this plan with great success. After reading up on his strategies (or seven steps) and browsing his website to create a budget, John and I realized that we already do really well on budgeting our expenses. His envelope system isn’t for us – we have a system in place already that works well and do not want to make a change in that arena.  However, his ideas regarding paying off debt, while pretty common sense, are something we can latch onto.

Basically, Dave says to pay off the debt that is the lowest amount first. Then once that debt is paid off, use the money that you would usually pay towards that piece of debt to pay for your next lowest note. Seems pretty simple, right? I know.

According to Dave’s plan, what I am doing wrong is how I am paying off my debt. Right now I am paying off two notes, and I am putting $150 extra a month toward each note. Instead, according to Dave, I should be putting that extra $300 towards the smallest note (my student loan) to pay it off faster. Then, once I get my student loan paid off I should put that $300 plus the minimum payment from my student loan towards paying off my car.  What do you think? Is this how I should do it? This makes a lot of sense, but will it actually allow me to pay off all of my debt sooner?

That’s my resolution, and I’m stickin’ to it.

Over and out. 

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